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Iridium Expands Stock Buyback by $500M, Boosts Authorization to $1.5B
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Iridium Communications Inc. (IRDM - Free Report) recently announced its fourth stock repurchase authorization in four years. The latest $500 million authorization, approved by its board of directors, is the largest in the company’s history. It extends the total buyback authorization to $1.5 billion through Dec. 31, 2027.
Iridium's stock repurchase program began in February 2021 with an initial authorization of $300 million. This was followed by another $300 million in March 2022 and $400 million in July 2023. The execution of these repurchase programs highlights the company’s ability to generate significant free cash flow. This key factor enables them to return value to shareholders while continuing to invest in growth and innovation.
Per an announcement in its second-quarter 2024 earnings release, Iridium is targeting a net leverage ratio of below 4 times through 2026, aiming to lower it further to below 2 times operational EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by the end of the decade. By reducing its leverage, Iridium is likely to manage its debt more effectively, ensuring long-term sustainability amid macroeconomic challenges. In the second quarter, Iridium repurchased nearly 3.3 million shares of common stock for $96.6 million. Additionally, it increased its quarterly dividend to 14 cents per share, resulting in year-to-date dividend payments of $32.8 million.
One of the key factors driving Iridium’s ability to return capital to shareholders is meaningful free cash flow generation, which it began generating after completing the Iridium NEXT satellite constellation program. The Iridium NEXT project replaced the company’s original satellite constellation with advanced satellites and services like Iridium Certus, providing better coverage and improved performance across the globe. As Iridium continues to execute its long-term growth strategy, its commitment to maximizing shareholder value remains a top priority, making it one of the most shareholder-friendly companies in the space and technology industries.
IRDM’s Top-Line Growth to Enhance Investors’ Return
Iridium continues to maintain a strong growth trajectory driven by increased deal wins and acquisition strategies. In April 2024, IRDM further solidified its foothold in the satellite technology space by acquiring Satelles, Inc., which is a leading provider of secure satellite-based time and location (STL) services. The acquisition allowed Iridium to introduce its innovative STL service, a critical offering that enhances satellite-based timing and location capabilities.
This deal complements Iridium’s portfolio of satellite services, which serve diverse markets, including maritime, aviation, government and the Internet of Things. This is likely to help Iridium gain a larger share of the fast-growing Positioning Navigation and Timing services market.
Iridium is benefiting from a highly lucrative recurring service revenue base. In the second quarter of 2024, total service revenues rose 5% year over year to $152.5 million, owing to strong recurring revenues from a broadened subscriber base. Owing to lucrative deal wins from the U.S. government, particularly the ongoing projects on the Space Development Agency, engineering and support revenues saw a 25% surge from the prior-year level.
Iridium’s $500 million stock repurchase plan reflects its financial strength and commitment to delivering shareholder value. With solid top-line performance and major investments in its satellite infrastructure, the company is poised to maintain a healthy financial position while rewarding investors with strong capital returns.
IRDM’s Zacks Rank & Stock Price Performance
At present, IRDM carries a Zacks Rank #3 (Hold). Shares have lost 38.3% compared with the sub-industry's decline of 8.5% in the past year.
Harmonic enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. HLIT delivered a trailing four-quarter average earnings surprise of 32.5%.
Ubiquiti company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
Arista Networks supplies products to a prestigious set of customers, including Fortune 500 global companies in markets like cloud titans, enterprises, financials and specialty cloud service providers. It delivered a trailing four-quarter average earnings surprise of 15.02%. In the last reported quarter, ANET delivered an earnings surprise of 8.25%.
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Iridium Expands Stock Buyback by $500M, Boosts Authorization to $1.5B
Iridium Communications Inc. (IRDM - Free Report) recently announced its fourth stock repurchase authorization in four years. The latest $500 million authorization, approved by its board of directors, is the largest in the company’s history. It extends the total buyback authorization to $1.5 billion through Dec. 31, 2027.
Iridium's stock repurchase program began in February 2021 with an initial authorization of $300 million. This was followed by another $300 million in March 2022 and $400 million in July 2023. The execution of these repurchase programs highlights the company’s ability to generate significant free cash flow. This key factor enables them to return value to shareholders while continuing to invest in growth and innovation.
Per an announcement in its second-quarter 2024 earnings release, Iridium is targeting a net leverage ratio of below 4 times through 2026, aiming to lower it further to below 2 times operational EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by the end of the decade. By reducing its leverage, Iridium is likely to manage its debt more effectively, ensuring long-term sustainability amid macroeconomic challenges. In the second quarter, Iridium repurchased nearly 3.3 million shares of common stock for $96.6 million. Additionally, it increased its quarterly dividend to 14 cents per share, resulting in year-to-date dividend payments of $32.8 million.
One of the key factors driving Iridium’s ability to return capital to shareholders is meaningful free cash flow generation, which it began generating after completing the Iridium NEXT satellite constellation program. The Iridium NEXT project replaced the company’s original satellite constellation with advanced satellites and services like Iridium Certus, providing better coverage and improved performance across the globe. As Iridium continues to execute its long-term growth strategy, its commitment to maximizing shareholder value remains a top priority, making it one of the most shareholder-friendly companies in the space and technology industries.
IRDM’s Top-Line Growth to Enhance Investors’ Return
Iridium continues to maintain a strong growth trajectory driven by increased deal wins and acquisition strategies. In April 2024, IRDM further solidified its foothold in the satellite technology space by acquiring Satelles, Inc., which is a leading provider of secure satellite-based time and location (STL) services. The acquisition allowed Iridium to introduce its innovative STL service, a critical offering that enhances satellite-based timing and location capabilities.
This deal complements Iridium’s portfolio of satellite services, which serve diverse markets, including maritime, aviation, government and the Internet of Things. This is likely to help Iridium gain a larger share of the fast-growing Positioning Navigation and Timing services market.
Iridium is benefiting from a highly lucrative recurring service revenue base. In the second quarter of 2024, total service revenues rose 5% year over year to $152.5 million, owing to strong recurring revenues from a broadened subscriber base. Owing to lucrative deal wins from the U.S. government, particularly the ongoing projects on the Space Development Agency, engineering and support revenues saw a 25% surge from the prior-year level.
Iridium’s $500 million stock repurchase plan reflects its financial strength and commitment to delivering shareholder value. With solid top-line performance and major investments in its satellite infrastructure, the company is poised to maintain a healthy financial position while rewarding investors with strong capital returns.
IRDM’s Zacks Rank & Stock Price Performance
At present, IRDM carries a Zacks Rank #3 (Hold). Shares have lost 38.3% compared with the sub-industry's decline of 8.5% in the past year.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader technology space are Harmonic Inc. (HLIT - Free Report) , Arista Networks, Inc. (ANET - Free Report) and Ubiquiti Inc. (UI - Free Report) . HLIT and UI presently sport a Zacks Rank #1 (Strong Buy), whereas ANET carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Harmonic enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. HLIT delivered a trailing four-quarter average earnings surprise of 32.5%.
Ubiquiti company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
Arista Networks supplies products to a prestigious set of customers, including Fortune 500 global companies in markets like cloud titans, enterprises, financials and specialty cloud service providers. It delivered a trailing four-quarter average earnings surprise of 15.02%. In the last reported quarter, ANET delivered an earnings surprise of 8.25%.